Wednesday, 22 November 2017

Debating the tax bill

There is nothing at all unreasonable about a departing member of any organization arguing about the legal basis on which outstanding debts should be settled.  Money is either owed or it isn’t, and there is little doubt in my mind that the EU27 have a reasonable basis for demanding that the UK meet the obligations to which the country has committed.  I’m equally clear that the UK can, if it wishes – and this is what the extreme Brexiteers are saying, simply renege on previously-made commitments and walk away, although I don’t share their optimism that those left with a hole in their budgets will simply shrug their shoulders and place their trust in any commitments that the UK Government makes in the future.
I doubt, though, that many of us would find our banks terribly understanding if we went to them and said, in effect, “We’ll offer to pay you part of what we previously committed to pay you, but only on condition that you allow us to dictate the terms under which we’ll bank with you in future”.  That, though, seems to be roughly the position of the UK Government in relation to settling debts with the EU.  In fairness, it is an approach that most of the extremely wealthy individuals and the biggest multinational companies would recognise, because it is precisely the approach which the UK Government adopts when it comes to taxing the rich and powerful.  They are allowed to pluck a figure out of the air, negotiate around it and arrive at a settlement under which they pay as much as they agree to pay, regardless of their actual tax liability, basically because that makes things easier for HMRC than having to go through all the bother of making a proper assessment.  So I can see why ministers might believe that it can work, although I’m far from certain that the EU27 will roll over as easily as HM Treasury does.
Underlying all this is that, instead of trying to debate and agree what the UK actually owes by considering the elements of the ‘bill’ carefully and reasonably, the UK government – egged on by a media which has little interest in facts or details – is obsessing over the total sum, and trying to create a spurious link between meeting agreed obligations on the one hand and demanding favourable future treatment on the other.  And they wonder why the EU27 are losing patience with them.

Monday, 20 November 2017

Latest update from Planet Zog

I thought that David Davis was simply making an attempt to re-affirm his extra-planetary origins in his speech last week.  The BBC’s Europe Editor saw it as evidence that the two sides were inhabiting “parallel universes”, but EU chief Donald Tusk dismissed it as simply an example of the “English sense of humour”.  It’s a kindness of approach which the UK Government has done little to deserve.  In the course of the speech, the Secretary of State for Exiting the EU gave us his latest take on the state of talks.  It was full of absolute gems:
·       The minister charged with ending the UK’s existing membership of the world’s most successful free trade area declared that he wants the “freest possible trade in goods and services”, and even that the UK’s current close economic ties “should continue, if not strengthen” after the UK breaks those ties.  Yes, he really is arguing that the ties with a non-member can be stronger than those amongst members.
·       The same minister, who is also charged with implementing the political decision to leave the EU, strongly warned the EU against “putting politics above prosperity”, because, after all, "Putting politics above prosperity is never a smart choice".   An understanding of irony is clearly in short supply on Zog.
·       With his responsibility for ending the over-regulation for which he and his team have been blaming the EU for decades, he made it clear that he wants the UK to lead a "race to the top on quality and standards" rather than engage in a "race to the bottom" that would mean lower standards.  Adding more regulation and standards is now better than abolishing them, apparently.
·       To complete his full house of demands for everything to change whilst everything stays the same, he went on to say that being able to resolve disputes without being subject to the rulings of a supranational body like the EU Court of Justice would require the creation of a supranational body to whose rulings both the UK and the EU would both be subject.
There is, of course, a very simple and obvious way in which he and the UK Government can have all that they claim to want here, but that is simply not the way that things are done on his home planet.

Friday, 17 November 2017

Only dealing with equals?

Last month, Wales’ First Minister gave us the benefit of his opinion on free trade deals following Brexit.  Superficially, his suggestion that we should not do free trade deals with countries that have lower levels of income than us is politically attractive. None of us wants to see Welsh companies being undercut or Welsh jobs being exported to low wage economies elsewhere.  There is a problem with this approach though, because it looks at things only from one narrow point of view.
If every country took the same view, then no country wealthier than Wales would ever want to do a deal with us.  After all, they wouldn’t want to see their jobs lost to a lower-wage economy like Wales, would they?  So one possible logical consequence of the First Minister’s position is that countries only ever do deals with other countries whose income per head is roughly similar; and that’s a recipe for locking the relative wealth of different countries and regions into its current position.  If free trade helps to spread wealth – and that’s the implication of the First Minister’s position - then under this approach the rich stay rich and the poor stay poor.  An ‘interesting’ stance for a Labour politician. 
But the likelier consequence is that there would simply be no free trade deals.  Perhaps that’s what the First Minister meant, even if it’s not quite what he said.  It would be a radical change of policy, and it would be interesting to see him spell out what it might mean in practice.  Some of the outcomes might well be positive over the longer term  - in terms of relocalising the economy and reigning in globalisation - even if, overall, it led to a reduction in international trade.  If moving towards that was really what he meant, he has a point worthy of much more detailed discussion and examination, not least in terms of handling the shorter term negative impacts.  I suspect, though, that he just hadn’t thought through what he was saying.

Thursday, 16 November 2017

Redwood just being honest

Some commentators have been more than a little unkind to John Redwood, for telling people in his capacity as an investment advisor that they should “look further afield as the UK hits the brakes” after telling us in his capacity a an MP that the “economic gains of leaving the EU will be considerable”.  Now I don’t really object to people being unkind to Redwood; it’s not as if he hasn’t done anything to deserve it.  His ‘rendition’ of our national anthem alone is a debt worthy of repeated repayment for decades to come, and that was but a small part of his performance as Secretary of State for Wales.
But are the two statements really as inconsistent as they appear?  As far as I’m aware, he didn’t tell us that the economic gains of leaving the UK would occur within the UK itself nor that they would accrue to all of us.  And rich people benefiting from the undermining of the UK economy is hardly a new phenomenon.
I suspect that people are confusing Brexit and British patriotism here.  For sure, ‘patriotism’ was one of the means used to persuade people to vote in a particular way, but that doesn’t mean that they ever intended it to apply to themselves.  Capital is never patriotic because it knows no boundaries; it only ever pursues its own interests.  The problem with the response to what Redwood said is that it’s political froth dealing solely with the apparent inconsistency of one politician.  It leaves untouched the wider question of who owns wealth and where real power lies.

Tuesday, 14 November 2017

The Best Pretender

The UK Government’s proposal to write the date of the UK’s departure from the EU onto the face of the bill is a powerful symbol of their determination to go ahead with Brexit without compromise.  It’s not much more than a symbol, though.  If there is one single principle or tenet underlying the UK Constitution, it is that Parliament has absolute sovereignty vested in it by the monarch, and that anything parliament can do it can subsequently undo.  So, yes, parliament can declare the date of departure on the face of the bill; but if it becomes clear that a change is needed, parliament can make that change.
It is a symbol to which all the Cabinet can sign up, of course - precisely because those who think it nonsense also know that it can be changed if (or when) reality requires.  And getting the Cabinet to agree to anything is something of an achievement in itself – the government’s internal negotiations seem to be more complicated and difficult than those with the EU27.  Unity on anything is a bonus; in a context where the UK pretends to make offers to the EU and the EU pretends to take them seriously, symbolism helps to strengthen the perception that the UK is better than the EU at pretending.  Perception can sometimes feel more comfortable than reality.
I can’t help but think, however, that the amount of time and effort being spent on symbolism to strengthen the UK’s posture of pretence might have at least some relationship with the lack of progress on the substance.

Monday, 13 November 2017

Intransigence and flexibility

The position taken by the UK Government – that Brexit cannot be allowed to create an ‘internal’ border between Northern Ireland and the rest of the UK - is an entirely reasonable one for any government to take.  Even if it were not so, the reliance of the current administration on the votes of the DUP requires no movement on that question.
The desire of the same government to do nothing which unpicks the Irish peace process is an equally reasonable and sensible one; no-one in their right mind (although whether that’s a fair expectation of May and crew is a separate question) would wish to endanger the progress which has been made.  So avoiding a hard border across Ireland is an imperative for them.
And, given some of the wilder promises made by Brexiteers about freedom and independence, it’s understandable that ‘Brexit means Brexit’ requires departure from the single market and the customs union.
The problem for the UK Government is that the three positions - all in themselves reasonable and logical outcomes of the vote last year – are not concurrently achievable.  They can have any two of them, but will have to yield on the third.  It’s clearly an unpalatable choice, but it will have to be made.  Their position to date seems to consist of demanding that ‘someone else’ (i.e. the EU27) comes up with an imaginative solution of the type that they are themselves unable to either imagine or articulate, and that the other side’s unwillingness to do what they can't do themselves amounts to bully-boy tactics.  The default position - increasingly likely given the lack of any serious attempt to do otherwise – is a hard border across Ireland.  Like so much else of the 'negotiating' attempts of the UK, it's as though they are working in a vacuum, in a way which isn't going to impact on real people.

Friday, 10 November 2017

Confusing ends and means

As an independentista, I am of course wholly supportive of devolving more tax powers – indeed, all tax powers – from London to Cardiff.  I don’t really need anyone to make the argument separately for any individual tax.  But the argument being made earlier this week for devolution of long-haul air passenger duty (APD) isn’t an argument about devolution at all; it’s an argument for abolition of the tax for certain airports.  Devolving the tax is presented as being simply a means to an end.
The core of the argument is that abolition of the tax would enable Cardiff to compete more effectively with other UK airports, and to expand the number of flights and destinations.  I’m not at all convinced that those are worthy objectives, and I’m conscious that the original objective of APD was, if not exactly to deter people from flying, then at least to make sure that the cost of doing so covered at least some of the environmental cost, particularly in a context where fuel for road traffic is heavily taxed and aviation fuel is not.  Whether APD is effective in that respect, or whether that aim is better achieved in another way is an issue on which I’m open to persuasion; but simple abolition with no replacement policy looks like a backward step to me.  However, I’d still support the devolution of that tax power, even if I were convinced that any conceivable government in Cardiff were likely to use it in a way which I don’t like.
That goes to the heart of my concern about the argument being put forward by those running Cardiff Airport.  Choosing where to place power over a particular tax on the basis of who is most likely to use that power in the way that a particular interest group wants looks to me like encouraging a ‘race to the bottom’.  It puts different tax authorities in a position of competing to see who can offer the lowest taxation regime.  That doesn’t look like a sound basis for deciding who should wield the power.

Tuesday, 7 November 2017

Ethics and the law

The revelation that the rich and powerful use tax havens to shelter their wealth from the taxes faced by the rest of the population is about as surprising as a revelation about the Pope’s religious affiliation.  Of course those who own the wealth take steps to protect that ownership; they always have.  But that doesn’t mean that there are no surprising aspects of the affair.
I wouldn’t expect people such as the monarch to be personally managing their own finances; the real decisions are taken by the lawyers and advisors who oversee the day to day issues.  But I would expect those advisors to have been given some sort of steer on the way in which they should behave, and three general directives strike me as being key to such a steer:
·         Get the best returns possible,
·         Make sure that everything is legal, and
·         Don’t do anything that would cause embarrassment if it became public.
It is in relation to the third of those points that there has been a failure, and three possible reasons occur to me for that failure:
·         The steer given to the advisors didn’t cover that point,
·         It did cover that point, but the advisors ignored it, or
·         It simply didn’t occur to anyone that a perfectly legal investment would cause any embarrassment.
Whilst I can’t entirely discount either of the first two, it is the third which seems to me to be likeliest; and it is in line with the defence generally being presented (and emphasised again and again in the media), namely that ‘there is no suggestion of any illegal activity’.  It raises the question, though, about whether we expect the richer members of society to exercise any moral or ethical responsibility, or whether compliance with the law is considered adequate.  It’s quite clear to me that those involved in this whole affair consider that their responsibility starts and ends with that which is legal; they have effectively outsourced their ethical responsibility to the legislature.  If the legislature does not explicitly prohibit something, then it’s acceptable.
At one level, that abdication of responsibility is deeply depressing, but at another it actually provides an opportunity.  It’s almost an invitation to the legislators to take on the responsibility and outlaw anything which looks like an attempt to avoid taxation or otherwise outrages the wider public.  All we need to do is to find enough legislators with an operational financial moral compass.  That's the part which might prove difficult.

Friday, 3 November 2017

Following the mob

On Wednesday, one of Wales’ former governors, William Hague, told us that he could not and would not support a second referendum on Brexit, because any such campaign would be ‘divisive and hate-filled’, even though he still believes that leaving the EU with no long-term deal in place – the favoured option of many of his political colleagues, and the outcome looking increasingly likely – would not be a good outcome.  It’s is clear that he believes that ending up with a poor outcome is better than the likely impact of a second campaign because of the way that campaign would develop.
In fairness, I think his fears about the nature of the campaign are well-grounded.  We’ve already seen the very ugly side of British nationalism at its worst on display in some of the tabloids – calling judges enemies of the people, and labelling opponents as traitors.  And that’s quite apart from the upswing in random racism and discrimination against foreigners.  I don’t doubt that it would get much worse than that in the event of any attempt to change direction, even if the condition which I’ve talked about before were to be met (i.e. evidence of a significant and sustained change of opinion). 
Notwithstanding that the promises made by the Leavers during the last referendum have been exposed for the lies that they were, and notwithstanding the increasing hard evidence of the impact of trying to implement that decision in a short timescale, any attempt to give the people a chance to express a different opinion would be fought tooth and nail by those who support Brexit, and we already know that truthfulness would be unlikely to feature in their response.
But here’s the question which Hague and others who take that stance need to answer: if it were to be clear that opinions had changed, and if it were to be clear that a change of direction would be in the best interests of the UK, would you really argue that we can’t have a second chance because those who ‘won’ last time round would use divisive and hate-filled tactics to try and repeat their victory?  Isn’t that at least a little bit like surrendering to mob rule?

Thursday, 2 November 2017

Context and facilitation

It is increasingly clear that events in Catalunya are leading increasing numbers of Welsh independentistas to turn against the EU.  There was an article along those lines on Nation.Cymru earlier this week.  It included other arguments against the EU as well, and I don’t entirely disagree with elements of the case which was made against the EU, such as for example the suggestion that “the EU is, in fact, a deeply anti-democratic institution which favours a parasitic Banking Sector and Big Corporations above all else”.  It’s worth pointing out, however, that that isn’t a position somehow adopted by the EU and imposed on its member states; it is rather a reflection of the position taken by the governments of the individual member states, and especially the larger ones.  And given a choice between that policy and the policies likely to be followed by a post-Brexit Tory government, I fear the latter rather more.  Being the lesser of two evils isn’t the best argument for anything, of course, but noting that the alternative is likely to be worse should give us at least a pause for thought.
That’s something of an aside; the question for me is about the context in which Wales moves to independence.  Many years ago, I came round to the view that the EU provides the best context for that step to ‘independence’.  Firstly, it redefines the word ‘independence’ itself in a way which fits the actual experience of most modern European states (and becoming a modern European state is what I want for Wales), and secondly it makes the step from where we are to that state of ‘independence’ a much smaller and even ‘safer’ one in a number of ways.  It’s not an ideal analogy, but within the context of the EU, it makes achieving statehood more akin to an internal reorganisation.
I fear, though, that some independentistas have assumed that the EU would be more than a context, and would be an active facilitator, and are becoming disillusioned when they see that it is not.  I see that as a delusion; I’ve never expected that a body which acts, first and foremost, on behalf of its member states would in any way seek to facilitate or assist the reorganisation of those states (which is surely what we independentistas are all about?) against the will of their central governments.  Why would it?  The task of bringing about that reorganisation, in the teeth of opposition from existing powers and interests, lies where it has always lain – with the people themselves.  The impetus will only come – can only come – from those who desire change.  And as Catalunya has demonstrated, it is unlikely to be an easy process, although it may be less difficult in some member states than others.
Right up until the very moment of the success of the new, the spokespersons for the old will continue to oppose and obstruct; expecting them to do otherwise is folly.  And the unionists will seize upon every such statement as ‘proof’ that what we seek is impossible.  The real question is this: once the people have spoken and the facts have changed, what happens?  In truth, none of us can be entirely certain, but I still believe that the response is more likely to be pragmatic than dogmatic.  The EU will adapt to new circumstances, not because the member states will be enthusiastic about it doing so, but because the European project itself demands that they can do no other.  Just don’t expect them ever to admit that in advance.